Compulsory Licensing And Access To Essential Medicines.
Compulsory Licensing and Access to Essential Medicines
Compulsory licensing (CL) is a legal mechanism allowing a government to authorize third parties to produce a patented product or process without the patent holder’s consent, usually to protect public health. The concept is primarily governed by TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement and national patent laws.
I. Legal Basis for Compulsory Licensing
TRIPS Agreement (1995)
Article 31 allows limited use of patents without the authorization of the patent holder, subject to adequate remuneration.
Article 31bis permits export of medicines under compulsory license to countries lacking manufacturing capacity.
Doha Declaration on TRIPS and Public Health (2001)
Clarified that TRIPS flexibilities allow countries to protect public health.
Emphasized governments can grant CLs for essential medicines to address epidemics and high-cost drugs.
National Laws
Countries like India, Brazil, Thailand, and South Africa have explicit provisions in their patent laws to grant CL for medicines when:
Medicines are not reasonably priced.
Public health emergencies exist.
The patentee does not work the patent locally.
II. Compulsory Licensing Case Laws
1. Natco Pharma v. Bayer Corporation (India, 2012)
Facts:
Bayer held the patent for Sorafenib (Nexavar), a life-saving cancer drug.
The price set by Bayer in India (~$5,500/month) was prohibitively expensive.
Natco Pharma applied for a compulsory license to produce a generic version at a lower cost.
Decision:
Indian Patent Office granted the CL under Section 84 of the Indian Patents Act.
Natco agreed to pay 6% royalty to Bayer on net sales.
Significance:
Landmark case for access to essential medicines in India.
Reinforced that CL is available if the patented drug is not reasonably affordable or accessible.
Set precedent for public health over corporate pricing strategies.
2. Roche v. Cipla / Novartis v. Natco (India, 2008–2010)
Facts:
Cipla challenged patents of Roche’s HIV/AIDS drug and Novartis’ cancer drugs in India.
India issued CLs and allowed generic production due to public health emergencies.
Decision:
Courts and patent authorities confirmed that CLs are consistent with TRIPS when public health is at stake.
Significance:
Demonstrated that generic competition through CL can reduce treatment costs drastically.
Encouraged countries to use TRIPS flexibilities for essential medicines.
3. Thailand Compulsory Licensing of Efavirenz, Lopinavir-Ritonavir (2007–2008)
Facts:
Thailand issued CLs for anti-HIV drugs patented by Merck, Abbott, and BMS.
The prices were deemed unaffordable for the population.
Outcome:
Ministry of Public Health issued CLs after negotiation with companies failed.
Price reductions of over 70% were achieved through local generic production.
Significance:
Thailand became a global model for government intervention in patent rights for public health.
Showed that CL is permissible even under international pressure.
4. Brazil Compulsory Licensing of Efavirenz (2007)
Facts:
Brazil threatened CL for Merck’s anti-HIV drug Efavirenz due to high cost.
Initially attempted voluntary license negotiations with Merck.
Outcome:
Merck eventually granted voluntary license at reduced price after Brazil announced CL.
Significance:
Demonstrated that CL can serve as a negotiation tool, encouraging voluntary licensing and lowering prices.
5. Canada: Apotex v. US and TRIPS (2007–2012)
Facts:
Canada used TRIPS Article 31bis to export generic HIV/AIDS medicines to Rwanda.
The CL was issued to Apotex to manufacture and export drugs under a public health program.
Outcome:
Successfully supplied affordable antiretrovirals to Rwanda without patent infringement claims.
Significance:
First major case demonstrating cross-border compulsory licensing under TRIPS.
Showed how countries lacking manufacturing capacity can legally import generics.
6. South Africa and the HIV/AIDS Crisis (2001)
Facts:
South African government faced a public health crisis due to HIV/AIDS.
Passed legislation allowing parallel importation and generic production.
Pharmaceutical companies sued for patent infringement.
Decision:
International pressure and WTO advocacy favored South Africa.
The government allowed generic competition to improve drug access.
Significance:
Strengthened the Doha Declaration principle that public health trumps intellectual property rights.
A key example of CL in a developing country context.
7. India and Natco’s Ixabepilone / Bayer CL (2013–2014)
Facts:
Bayer’s Ixabepilone (anti-cancer) was expensive and not manufactured in India.
Natco applied for a CL to provide local generic production.
Outcome:
Indian Patent Office granted the CL after finding that reasonable affordability and local working requirements were not met.
Significance:
Reiterated India’s proactive CL policy for essential medicines.
Showed continuity in policy following the Nexavar case.
III. Lessons from Case Laws
CL is a Public Health Tool – Focuses on affordability, accessibility, and local manufacturing.
TRIPS Flexibilities are Enforceable – Doha Declaration explicitly supports public health priorities.
Voluntary Licenses Often Follow Threats of CL – As seen in Brazil and Thailand.
Royalty Payments are Mandatory – Patent holders receive reasonable remuneration even under CL.
Cross-Border CL is Feasible – Canada to Rwanda case demonstrates export under TRIPS Article 31bis.
National Laws Matter – India, Thailand, and Brazil show proactive domestic implementation of CL.
IV. Conclusion
Compulsory licensing balances patent rights and public health imperatives. Case law shows that governments in developing and even developed nations can legally authorize generics to address essential medicines shortages. For multinational pharmaceutical companies, this underscores the importance of:
Flexible pricing strategies
Voluntary licensing negotiations
Awareness of TRIPS flexibilities
Incorporating access-to-medicine clauses in global operations
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